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5 Oversold Stocks Ready for a Bounce Higher

TTWO ChartTTWO data by YCharts

Take-Two Interactive Software (TTWO).
Take-Two Interactive Software is a leading worldwide developer, publisher and distributor of interactive software games. Take-Two Interactive trades an average of 2.4 million shares per day with a marketcap of $884 million.

52 Week Range: $8.89 to $16.27
Book Value: $6.60
Price to Book: 1.38

Ten (over 70%) out of 14 analysts rate TTWO a "buy" or strong buy. The company has four "holds," and none of the analysts give a sell rating. Shareholders have not been rewarded for their patience, shares have fallen 30.7% in the last year, and the average analyst target price for TTWO is $18.19.

Take-Two is anticipated to report weak earnings after the market closes on July 31. The consensus estimate is currently a loss of 78 cents a share, a decline of 71 cents from a loss of 7 cents during the same period last year.

The mean fiscal year estimate price-to-earnings ratio is 5.08, based on earnings of $1.81 per share this year. In the last month the stock has fallen -10.07%. Shares are below the 200-day moving average and the moving averages place Take-Two in a strikingly bearish trend.

For the same fiscal period year-over-year, revenue has declined to $1.14 billion last fiscal year compared to $1.16 billion in the previous year. The bottom line has rising earnings year-over-year of $48.45 million last fiscal year compared to $-122.99 million in the previous year.

Short interest is very high at 17.44% and may provide the fuel for a massive short squeeze if Take-Two can deliver during earnings.

Take-Two is oversold on the weekly and daily charts and is due for a technical bounce. The best way I have found for playing oversold stocks is to write put options. Writing put options lowers positional risk and compensates for both time and favorable directional movements.

I like the August $9 put this week during the next few days for 50 cents or greater. My profit target is 40 cents or close out on option expiration date.

Stock quotes in this article: TTWO, F, ROVI, KEG, TC 

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